Erroneous SDG&E/IOU WEBA Assumptions – Part II

In their amended A0908020 application to bill power customers for uninsured wildfire legal and other liabilities, the investor owned utilities SDG&E, PG&E and SCE are asserting a constitutional entitlement: customers must pay for all operating expenses, even if those expenses arise from negligence, illegal acts or even plain stupidity on the part of both utility executives and their relatively-unsupervised employees and contractors.

The A0908020 Wildfire Expense Billing Account (WEBA) application now before California's Public Utilities Commission, as written by numerous attorneys for the utilities, makes the following argument:

"Second, rate recovery is consistent with the Commission’s constitutional and statutory obligation to allow the Utilities a reasonable opportunity to recover their costs of providing public utility service. Third-party liability, including liability for wildfires, is an unavoidable cost of doing business. Unlike insurance carriers, who can limit their risks by choosing to limit coverage, the Utilities have an obligation to serve all customers in their service territories, and thus cannot withdraw from fire-prone areas. Nor can the Utilities realistically operate their systems in a way that would eliminate all risk of fire. As the Commission recognized in a related context, it is 'not realistic' to expect '100% compliance' with all safety rules. Even if a Utility is in perfect compliance with the Commission’s rules, its facilities may nevertheless contribute to a fire. Costs resulting from wildfires are an inherent cost of fulfilling the Utilities’ duty to serve, and as such the Utilities are entitled to the opportunity to recover such costs."

It is worth noting that the utilities' argument above is based on providing service to the public through utility systems that even the utilities recognize cannot "operate in a way that would eliminate all risk of fire." As long as public utilities will not make the 21st century investment of putting 19th century power lines underground -- and as long as maintenance is deferred on high-pressure gas lines that have already been identified as unsafe as in San Bruno -- then it is absolutely true that utilities operate inherently unsafe systems, as they admit above.

The inherently unsafe systems operating as power utility assets must be paid for by power customers as a constitutional entitlement, according to attorneys paid by SDG&E and the other utilities.

Under CPUC's previous decision regarding Sempra Energy's First Priority Condition to infuse needed working and other capital into SDG&E, the safety of consumers should be the first priority of any entity operating with what it believes is a constitutional entitlement to be paid by us. It is constitutionally inconsistent with the rights of ordinary people in California, where the people's rights include the protection of life, liberty, and property from any takings without due process under the law. These popular rights pre-exist any constitutional claim of the utilities, and their is no constitutional provision by which utilities may trample the inalienable rights of the people of California to life, liberty, and property.

Utilities are supposed to serve the people, not the other way around like a sinister real-world version of The Matrix, where all people have been connected, smart-metered and utility-controlled to the point that we become nothing more than batteries in the grid.

The people of California have an expectation that power utilities operate their systems that do not explode unexpectedly at the dinner hour or burn down the county on a foreseeable, predictable basis... especially when previous SDG&E employee testimony before CPUC's Consumer Protection and Safety Division clearly pointed out lapses in SDG&E management practices that CPUC ordered revised and updated after the 2007 San Diego County Wildfire Complex to meet public expectations of safe operation.

As potential defendants in wildfire litigation, the public utilities and their insistence on taking their immense profits intend that we as power consumers will see our bills go up indefinitely due to the WEBA charges we may one day see on our bills. Currently, smart meters are being installed to insure we are billed for every watt we use and charged more for using it during the business day, but this does not address any of the issues that led to the utilities' catastrophic systemic failures that we have witnessed throughout California in the last decade of power utility operation.

On the other hand, those immense profits do seem to wind up funding stock buybacks and a handsome quarterly dividend payout of 35-40% compared to retained earnings in the case of Sempra Energy and its SDG&E holdings.

Use "First Priority Condition" in the Reader site search box to find previous blogs on Sempra Energy's mandate to invest its profits as SDG&E working capital.

Comments

"Available information suggests that at no time since wholesale energy prices started rising in the summer of 2000, while the utilities were increasingly strident in their claims of worsening financial condition, imminent bankruptcy, and the consequent threat to their ability to fully meet their obligation to serve, did any of their respective holding companies provide an infusion of capital to address the utilities' capital needs as detailed above. We will investigate whether this apparent failure to infuse capital violates the condition in our holding company decisions that the holding company give 'first priority' to the capital needs of its utility subsidiary to meet its obligation to serve."